Water is the key prerequisite for sustainable development. The three dimensions of sustainable development--economic, social and environmental—must all be addressed for effective water management.

Water is essential for economic activities-- for agriculture, energy production, manufacturing, and consumption.

Clean water is necessary for human development. Access to safe water reduces child mortality and contributes to universal primary education and gender equality because girls can stay in school instead of spending hours fetching water.

Water sustains ecosystems that provide what is known as “ecological services”-- marshlands to purify water, mangroves to protect against floods, forests to absorb carbon, and habitats for the animals and plants on which human life and economic activity depend.

II. Solutions to the water challenge

Properly addressing these dimensions of water is a complex challenge. By 2030, the world economy is projected to double and the world population to increase by one-third – another two billion people. To feed them, crop production will need to increase by 50%. Growing pressures from agriculture, energy production and industries are imperilling our water resources. We see pollution, misallocation among different competing uses of water, and too many people without safe drinking water.

Water is under threat. All countries - OECD and developing countries alike – need to introduce policy reforms and scale-up best practices to avoid dire consequences.

III. Managing water resources

The new OECD Environmental Outlook projects that by 2030, 3.9 billion people, or 1 billion more people than today, will be living in areas under severe water stress. The majority of these people will be in emerging economies, particularly in South Asia and China.

“Water stress” means an imbalance between growing - competing - water demands, and increasingly erratic availability of freshwater of sufficient quality. While water stress is a challenge facing many parts of the world, it cannot be addressed at the global level, it is a local phenomenon.

Worldwide, agricultural irrigation accounts for about 70% of water use, with the rest for power plants, industries and public water supply. Many OECD countries have managed to “decouple” water use from economic growth over the past decade, largely thanks to more rational pricing, better technologies, and consumer awareness and information (e.g. households appliance labelling) to conserve water.

I congratule Quebec’s new bill to protect surface and groundwater by declaring it a “collective resource part of common heritage of the Quebec nation”. We at the OECD have long been proponents of the “user pays” principle.

Outside the OECD area, Chile (which is a candidate for accession to the OECD) is pioneering water rights trading to promote rational use. But overall, in the developing world, water use is projected to grow significantly in the coming decade, in line with more rapid pace of growths in GDP, agricultural production and population.

The pressure on water resources is exacerbated by the continued deterioration of freshwater quality. Most OECD countries have successfully tackled surface water pollution, mainly by regulating industrial discharges and investing in urban sewage treatment.

But agriculture still remains a challenge. Fertilizers, pesticides and livestock manure continue to pollute our rivers, lakes and aquifers. Nearly 60 million tonnes of nitrogen are expected to reach coastal waters from inland sources by 2030, killing fish and disrupting ecosystems along the way. To address this, we need to reform environmentally-harmful agricultural incentives and policies, and scale-up ecological farming practices.

In some cases, water resource management is a transboundary challenge for shared water basins. Examples include the Great Lakes for Canada and the US, and the Colorado River for the US and Mexico. Good governance, involving effective and well-enforced international agreements, is crucial for transboundary water management.

However, there is a huge financing gap. Filling it will require an additional USD 10 to 30 billion per year. Compared to the amount OECD countries currently spend on subsidies to farmers – almost a billion dollars each and every day - this is affordable. So why are we not delivering?

Most of financing for water and sanitation comes from public budgets, both domestic and ODA, but the private sector and water tariff revenues should also play crucial roles. Sadly, donor financing to the water sector as share of total ODA has been falling since 2000. Donors need stronger political will to deliver on their commitment to the MDGs. Price hikes to meet the full costs of the service can sometimes be politically difficult. Private investors have been pulling out of the water sector and access to credit has been limited, particularly for local water service providers in developing countries. We need to attract them back to the sector, not chase them away. Better governance is needed to strike a balance between economic, social and environmental objectives, and to design a mix of policies according to specific local contexts.
Financing for the water sector is not just a problem for developing countries. OECD countries also need to invest in water . They have to rehabilitate ageing infrastructure and meet more stringent environment and health regulations.

A recent OECD report estimates that investment in water infrastructure to 2030 will need to be three times that for roads, and five times that for electricity. France and the UK will need to increase their water spending as a share of GDP by about 20% just to maintain their current levels of service. Japan and Korea may have to increase their water spending by more than 40%.

To help meet this challenge, the OECD is examining innovative financing and business models for water infrastructure that can capture, for example, benefits of reduced health costs and higher property prices.

V. Adapting to climate change

And, major expenses are in the horizon as we prepare for climate change, which will worsen water-related problems and increase investment needs. OECD countries have already experienced significant flood damages and droughts in some regions (e.g. Australia, parts of the United States and Southern Europe).
Climate change may not simply increase the magnitude of known problems, but may completely change the nature of the water problems that we face today. A recent OECD study shows that —despite some progress-- both OECD and non-OECD countries have yet to fully integrate climate adaptation into domestic water policy frameworks.

VI. OECD’s Response

I would like to conclude with a few words on the latest OECD work to help countries meet these water challenges.

We are examining trends and practical difficulties with water pricing, both for municipal supply and agriculture. OECD is developing tools to help governments plan financing for investments in water infrastructure, including engaging private sector investors, so that water services are delivered efficiently and effectively to all. We are working with the World Water Council, the Global Water Partnership, the UNSGAB, with Aqua Fed, and other groups. The governance of the water issue is very diversified and dispersed. We need to forcus on that. I will be reporting the results of our work at the 5th World Water Forum in Istanbul in March 2009.

But all the problems of the water sector will not be solved in Istanbul. We know the obstacles and how to overcome them. The real challenge is implementation.

Governments, businesses and communities need to join forces and share the risks and responsibilities to ensure that water – the public good of water – is available to all.
Merci